Twist in high-speed networking may create new battleground

The next battleground in high-speed networking is likely to bring the benefits of an office network to sprawling telecommunications layouts.

3 January 200212:43 am GMT

Think of it as a newly built superhighway with nearly limitless lanes for
traffic.

The next battleground in high-speed networking is likely to bring the
benefits of an office network to sprawling telecommunications layouts,
lowering the costs of being in the communications business.

Cisco Systems, Extreme Networks, Foundry Networks and others are
using their expertise in Ethernet, a popular technology used to connect PCs
in the office, to come out with new lower-cost hardware that
telecommunications service providers can use to offer fast Internet access
at cheap prices.

"Applications, such as video streaming, are going to flourish," said Frank
Robles, vice president of corporate development for Yipes, a
start-up that offers cheap but fast Net service to businesses. "When the
handcuffs were taken off with memory of computers, applications exploded.
The same thing will happen with more bandwidth."

Today, most businesses are using Ethernet-based connections that run at
either 10 or 100 megabits per second (mbps) or 1 gigabit per second (gbps).
That is the speed that bits of information travel across a network.
Networking companies and an industry standards group are in the midst of a
two-year effort to boost Ethernet's speed
tenfold: to 10 gbps.

With a new high-speed version of Ethernet in the works, networking companies
hope to tap into a hot new service provider market, where start-ups, such as
Yipes and Telseon, recently captured about $200 million each in
venture capital funding. They are attempting to undercut more established
companies by selling lines to businesses using Ethernet technology and
optics, rather than more costly T1 lines.

The start-ups, which also include Cogent Communications and Intellispace,
have been using Ethernet-based equipment that run at gigabit speeds. But
with the higher-speed Ethernet, they can soon offer Net connections that are
ten times faster. The extra bandwidth will allow them to offer new services,
such as
video-on-demand and storage of company data.

Even though the 10 gigabit Ethernet
standard won't be finalized until March of 2002, analysts said most
networking companies will ship products supporting 10 gigabit Ethernet in
the second half of this year.

The networking companies will fight for a piece of the 10 gigabit
Ethernet market that will grow from $71.4 million in revenue this year to
$3.6 billion in 2004, according to analyst firm Dataquest.

Foundry and Extreme executives said their 10 gigabit Ethernet products will
ship in the second half of the year. Cisco is currently showing prototypes
of its 10 gigabit Ethernet technology to its customers.

Cisco executives declined to state when Cisco will ship products but did say
the company plans to ship before the standard is finalized this spring.
Networking executives said their customers can quickly and easily upgrade
the early 10 gigabit Ethernet technology when the final version of the
standard is released. That is a plan similar to what transpired when
gigabit-speed Ethernet was introduced to the market in the late 1990's.

The higher-speed Ethernet products will be used to unclog congestion on corporate networks,
providing the extra capacity needed for employees to perform
bandwidth-demanding tasks on their computers, such as exchanging large files,
conducting video conferences, or making phone calls over the Net.

But analysts say the new version will be most popular among service
providers first, particularly start-ups that are using Ethernet-based
equipment to offer faster high-speed Net access at cheap prices.

"It will initially be a carrier play," said analyst Ron Westfall, of Current
Analysis. "This will allow them greater capacity to offer a wider range of
Internet-based services beyond just Net access, like video services."

Ethernet-based network equipment serves as a cheaper replacement for other
high-speed networking technologies that service providers have historically
used, such as asynchronous transfer mode (ATM) and synchronous optical
networking (SONET) technology, according to analysts.

Rutstein said he expects traditional phone companies, which have used the
older networking technology in the past, will eventually start using the 10
gigabit Ethernet technology because it's cheaper. The 10 gigabit Ethernet
technology runs at speeds that are comparable to the fastest SONET speeds,
he said.

Networking executives say offices that have big appetites for network
bandwidth, such as government labs, will also be among the first to buy the
early products.

"We're talking early adopters this year," said Bruce Tolley, Cisco's manager
of emerging technologies. "We've got energy companies who have to send large
image files, people who do medical simulations of HIV treatments and need
the fat 10 gigabit pipes."

Networking analysts and executives envision a future where Ethernet-based
systems are everywhere, from corporate networks to the Internet.

Using Ethernet in both corporate and service provider networks will be
cheaper and provide an easier network to maintain, analysts said. Service
providers, for example, won't have to translate data from one networking
protocol, such as Ethernet, to another networking protocol, such as ATM,
while it travels to its
destination, Rutstein said.

"That's a pain for service providers to have to translate on both ends," he
said.